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Zimbabwe: Vfex in False Start

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The much-awaited Victoria Falls Stock Exchange (VFEX) got off to a false start with no trading taking place on the bourse in what was supposed to be its first week of trading due to the absence of an exchange control framework which has since been issued by the Reserve Bank of Zimbabwe, 263Chat Business reports.

The VFEX, launched last week Friday was expected to commence trading on Monday this week but the market participants had to stay put awaiting the Central bank directive which was only issued Tuesday evening.

The exchange control directive is meant to facilitate and administrate foreign currency inflows and outflows on the VFEX.

As it stands, SeedCo International is the only company listed on the VFEX.

According to Exchange Control Directive RV177/2020, all foreign currency inflows invested into a resident company listed on the VFEX shall be from free funds or offshore funds and these investment funds shall be credited into the listed corporate’s Investments FCA.

It also stated that funds held in the Investments FCA shall not be subject to any surrender requirements and shall be held for an indefinite period for use by the listed company.

Exchange Control approval will be required from resident companies listed on the VFEX, for opening an offshore account for the purposes of receiving investment proceeds.

Non-resident companies listed on the VFEX would receive investment funds in local or offshore investment accounts.

The non-resident company can keep funds raised from the listing or the balance after investing the required amounts in Zimbabwe.

“Foreign currency received by resident investors on the VFEX as disinvestment proceeds and dividends into their local FCA accounts, shall be eligible for meeting offshore payments as well as settling local obligations.

“Dividend or disinvestment proceeds due to non-resident investors shall be freely remittable through the Authorised Dealer without seeking prior Exchange Control approval,” the RBZ said.

The VFEX has attracted commendable interest from both local and external companies in the run-up to its official launch last week and more listings and trading on the exchange is expected to gain traction next week.

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